Big Tech Earnings, Fed Decision Set Up Super Week as Markets Brace for Volatility

Global financial markets this week will zero in on earnings from major US technology companies and the outcome of the Federal Open Market Committee meeting. Crypto markets are also poised to react to signals on artificial intelligence investment and the path of interest rates.

From July 27 to July 31, major US technology companies including Microsoft, Meta Platforms and Amazon.com are due to report second-quarter results. Investors are focused less on the earnings figures themselves than on capital expenditure plans, the pace of AI infrastructure spending and changes in free cash flow.

Alphabet earlier posted results that beat market expectations, but its free cash flow turned negative for the first time on record as it increased spending on AI infrastructure. That has made the hit to profitability from heavier AI investment a key variable this earnings season.

The Federal Reserve will hold its FOMC meeting on July 28-29 to set benchmark interest rates. CME FedWatch data show markets are pricing in a high probability that rates will remain unchanged. At a press conference scheduled for early July 30 in Korea, Fed Chair Kevin Warsh will be closely watched for signals on the timing of future rate cuts and the central bank's response to inflation pressures from higher oil prices.

The Middle East is another variable. If tensions between Saudi Arabia and Houthi rebels escalate, pressure on international oil prices could continue to build. That could weigh on sentiment toward risk assets.

In Chinese equities, ChangXin Memory Technologies, China's largest DRAM maker, will list on July 27. Later in the week, investors will watch the Chinese Communist Party Politburo meeting for signs of additional economic stimulus or industry support measures.